# Maximum Purchase Price Formula

## What Is The Maximum Purchase Price Formula?

The Maximum Purchase Price formula is used to calculate the Maximum Purchase Price you should offer for a property.  The formula uses a detailed analysis of all of the project costs including your Repair Costs, Buying Costs, Holding Costs, Selling Costs, & Financing Costs.

The Maximum Purchase Price formula is the most accurate calculation, because it requires you to think about, consider & calculate every single project cost on the project.

<span style="padding: 6px;margin-right: 6px;font-size: 16px;"class="lesson-quote--tag blue">Maximum Purchase Price</span> = After Repair Value - Buying Costs - Holding Costs - Selling Costs - Financing Costs - Repair Costs - Profit

What is ARV?
How to Calculate the After Repair Value

<div class="lesson-quote-block u-bg-teal-25"> <div class="lesson-quote--container"> <div class="lesson-quote--eyebrow u-text-darkteal">Maximum Purchase Price Example</div> <div style="font-size:16px; padding-bottom:10px;" class="lesson-quote--col-1 u-text-blue">A flipper finds a distressed property that the seller is asking \$85,000 in a neighborhood with \$200,000 resale values.  After performing a detailed analysis of all of the project costs the flipper calculates the following costs:<ul style="padding-top:10px; list-style:none;font-size:16px;"><li>Repair Costs = \$65,000</li><li>Buying Costs = \$2,000</li><li>Holding Costs = \$3,750</li><li>Selling Costs = \$16,000</li><li>Financing Costs = \$7,500</li><li>Desired Profit = \$30,000</li></ul><p style="padding-top:10px;margin-bottom:0px;">How much should the flipper offer using the MPP Formula?<p style="padding-top:10px;margin-bottom:0px;">In this scenario, the seller is asking for \$85,000 which is \$10,000 more than the recommended purchase price of MPP Formula.</div> </div> </div>

## Deal Analysis Case Study

Learn how to Analyze a House Flip and Create a Professional Investment Report in less than 5 minutes!

In this Case Study, Dave will walk you through the analysis of an example house flipping deal and provide insight on how you can quickly analyze prospective deals in a matter of minutes.

<iframe width="560" height="315" src="https://www.youtube.com/embed/UFvU_dcKdGo" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>

## When Should I Use The Max Purchase Price Formula Vs The 70% Rule Formula?

The 70% Rule Formula should be used to initially quickly analyze the validity of a deal to see if you should spend more time to fully evaluate the property using the Maximum Purchase Price formula.

If the deal meets your 70% Rule criteria, you can perform a full Maximum Purchase Price analysis to determine the actual purchase price you should offer for the property.

<span class="lesson-quote--tag orange">TAKE ACTION</span>
<p>Now That You Know How To Analyze A Flip Deal, Start Finding And Analyzing Deals In Your Marketplace. The More You Practice, The Better You'll Get At Quickly Valuing Potential Deals.</p>

## Tools To Analyze House Flipping Deals

If you are the old fashioned pen-and-paper type, a pen and notepad or a used napkin will work just fine...

### Good 'Ole Trusty Calculator

Listen, there's no crazy calculus  involved in calculating your purchase price, so you don't need a fancy 'Scientific Calculator'....you should be able to use any ordinary calculator or phone app to calculate the MPP.